Case Study: Demand Flexibility for Swift Transition to Renewable

Demand flexibility is the capacity of demand-side loads to change their consumption patterns hourly or on another timescale. It can help make electricity more affordable by helping customers use less power when prices are high. The research community claims that Demand flexibility will play a key role in reaching high levels of renewable generation and making the transition to a more sustainable energy system.

Demand Flexibility has been around as a concept for years as a likely smarter and cheaper alternative than simply repeating the conventional approach of building more generators and yet bigger grids to meet periods of peak demand.

There have been some talks about demand flexibility in the international community with few trusting it to play a crucial role in the goals of transition to renewable. Australian Shell Energy Project offers a good insight into the utility of the concept in tandem with the country’s efforts to shift to renewable energy. The firm’s Smart Energy Hubs try to integrate and co-optimise energy supply, generation, energy management and demand flexibility as per the need.

Shell Energy Smart Energy Hubs Deployment Project

The $31.6 million project, known as ‘Commercialising Smart Energy Hubs’, will demonstrate the largely untapped potential of demand-side energy management by controlling loads of at least 40 commercial and industrial customers.

On successful completion, it will become instrumental in removing regulatory and commercial barriers to the broader adoption and delivery of flexible demand services.

Shell Energy aims to unlock 417 MW of flexible demand. It acts as a catalyst to realise 1 GW of commercial and industrial (C&I) flexible demand capacity across the broader National Electricity Market (NEM) by the end of 2025.

Recently, the project got the Australian government’s push with the Australian Renewable Energy Agency (ARENA) announcing $9.1 million in funding to Shell Energy Australia (Shell Energy) for its Smart Energy Hubs Deployment Project.

Utility of the Project

Harnessing an estimated 21.5 MW of flexible demand capacity, the project will undertake shopping centres, supermarkets, and a refrigeration distribution centre across Queensland, New South Wales and Victoria. Shell Energy’s task will involve building a whole-of-site solution to optimise the energy system including heating, ventilation and air conditioning (HVAC), refrigeration, electric vehicle (EV) charging control, and onsite solar PV and storage.

The sectors represent the immense near-term opportunity for flexible demand capacity due to their large thermal loads with options to manage heating and cooling. Demand flexibility that the project promises offers a way to reduce the load on the grid during busy periods. This will be instrumental in reducing energy costs, lowering peak demand, and moving energy loads to when there are high amounts of renewable energy. Further, this can be done in real-time as a response to market signals, generation shortfalls, or network constraints.

The Smart Energy Hubs pilot project has kicked off with the GPT Group’s Chirnside Park Shopping Centre, in Melbourne’s northeast. The Chirnside Park Shopping Centre will become a carbon-neutral shopping centre, thanks to a more than 50% improvement in energy efficiency, switching to renewable electricity and offsetting residual emissions. It will have a 2 MWh battery and 650 kW solar array with a demand response load which will use predictive technology that will enable, as the firm claims, load reductions of up to 70 per cent during peak times.

Long-Standing in the Pipeline

Ever since 2019, Shell Energy has been developing and testing its C&I load flex product (LoadFlex) capability. Finally, after three years of waiting, the firm launched the Smart Energy Hub pilot project with The GPT Group at its Chirnside Park Shopping Centre in September 2022.

Expected Outcomes

The project is expected to help in reducing costs for flexible demand services and firm renewable energy generation across the system through the deployment of Smart Energy Hubs across C&I sectors. It will further improve the understanding of the efficient ways to commercialise Smart Energy Hubs at scale. It will also be instrumental in understanding the importance of stakeholder engagement in reducing barriers to flexible demand services.

Further, it is considered a key pillar of the federal government agency’s strategy to optimise the transition to renewable electricity, which may subdue the need of building large-scale batteries.

“For commercial and industrial sites, flexible demand is a potential alternative to costly upgrades to network infrastructure or building large-scale batteries. To achieve the full potential of flexible demand, we will require new innovation, technologies and market processes,” says Arena CEO Darren Miller.

The Shell Energy project may well be the prototype of what lies ahead for the country surfing the idea of energy demand management.

Miller adds, “Shell Energy’s initiative represents ARENA’s first C&I project to demonstrate a whole of site optimisation of energy demand management for delivery of market, ancillary and customer benefits through the control of energy load.

“We look forward to working with Shell Energy in showing how we can unlock the potential and accelerate flexible demand at C&I sites and businesses.”